Good morning!
Grains boosted by potential thawing of U.S., China trade tensions... Corn, soybeans and wheat firmed overnight amid news top U.S. and Chinese trade officials will meet. As of 6:30 a.m. CT, corn futures are trading 5 to 6 cents higher, soybeans are mostly 11 cents higher, winter wheat markets are 4 to 7 cents higher and spring wheat is 2 to 3 cents higher. The U.S. dollar index is around 150 points higher and front-month crude oil futures are about 50 cents higher.
U.S., China to hold trade talks this weekend... Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer will meet China’s economic tsar He Lifeng in Switzerland this weekend for talks that could be the first step toward resolving the trade war. “My sense is this will be about de-escalation,” Bessent told Fox News. “We’ve got to de-escalate before we can move forward.” China’s commerce ministry said, “On the basis of fully considering global expectations, China’s interests and the appeals of U.S. industry and consumers, China has decided to re-engage the U.S.” The two sides are expected to discuss reductions to broader tariffs, two sources familiar with the planning told Reuters. The talks should also cover duties on specific products, export controls and President Donald Trump’s decision to end de minimis exemptions on low-value imports, one of the sources added. Officials indicated they are not expecting major breakthroughs but see these talks as a necessary first step to reduce tensions and set the stage for future negotiations.
Mexico ag minister touts unspecified deals with United States... Mexican Agriculture Minister Julio Berdegue said on Tuesday he reached agreements with USDA Secretary Brooke Rollins in a “friendly” meeting in Washington and met with tomato industry executives. Berdegue did not elaborate in his post on X, but said the deals would benefit both countries. He later posted again on X saying he met with more than two dozen representatives and companies involved in distributing Mexican tomatoes in the United States. “They highlighted the adverse effects of the measure adopted by the U.S. government, which will make tomatoes more expensive for consumers,” Berdegue said about his meeting with executives.
Crop tour projects smaller Oklahoma wheat crop... A group of Oklahoma crop experts projected Oklahoma’s 2025 winter wheat production at 101.169 million bu. with an average yield of 35.9 bu. per acre following an annual crop tour across the state. The estimates were based on field assessments conducted by Oklahoma State University Extension specialists as well as private crop consultants and area agronomists. Members surveyed at a meeting of the Oklahoma Grain & Feed Association pegged the state’s crop at 103.336 million bu. with a yield of 37.2 bu. per acre. In 2024, Oklahoma produced a wheat crop of 108.3 million bu. with an average yield of 38 bu. per acre. The Wheat Quality Council’s annual HRW wheat tour through Kansas will be held May 13-15.
All attention squarely on Powell’s post-monetary policy meeting comments... The Fed is widely expected to hold interest rates at 4.25% to 4.50% following the two-day Federal Open Market Committee meeting this afternoon. Fed Chair Jerome Powell’s post-meeting press conference will be closely monitored for indications about possible rate cuts later this year, especially since this is the first policy decision since President Trump’s tariff announcements.
China injects broad ‘tactical’ monetary stimulus ahead of U.S. trade meeting... Chinese authorities announced multiple stimulus measures, including interest rate cuts and a major liquidity injection, as Beijing steps up efforts to soften the economic damage caused by the trade war with the United States. China’s central bank will lower the borrowing cost of its seven-day reverse repurchase agreements, its benchmark interest rate, by 10 basis points to 1.40%, effective May 8. Other interest rates will drop in line with the key rate. The amount of cash that banks must hold as reserves, known as the reserve requirement ratio (RRR), will also be cut by 50 basis points from May 15, bringing the average level to 6.2%. This will release 1 trillion yuan ($138 billion) in liquidity into the banking system. Additionally, authorities will help A-share listed companies affected by tariffs to cope with difficulties, expand a pilot scheme allowing insurance companies to invest in stock markets by an additional 60 billion yuan ($8.31 billion), set up low-cost relending facilities for purchases of tech-related bonds, and for investments in elderly care and services consumption, enhance support agriculture and small businesses and trim mortgage costs for some buyers.
Palm oil prices likely to fall to two-year low in second half of this year... Malaysian palm oil futures are likely to extend their decline and trade near a two-year low of 3,500 ringgit ($826.5) per metric ton from June to November as recovery in production leads to a stock build, industry analyst Dorab Mistry said. Palm oil production usually rises in top two producers Indonesia and Malaysia in the second half of the year. Palm oil’s premium over rival soyoil in recent months led to a loss of market share. However, palm oil has now become slightly competitive and must maintain this competitiveness to recover its market share, he said, referring to the recent fall in prices.
EIA sees higher oil price volatility amid tariff uncertainty, OPEC policy... Perceptions of oversupply among oil market participants from increasing OPEC+ output and uncertainty about the economic impact of tariffs have raised short-term oil price volatility, the U.S. Energy Information Administration (EIA) said in its short-term energy outlook report. U.S. West Texas Intermediate crude oil prices will average $61.81 a barrel this year, EIA said, a more than $2 per barrel reduction to its prior forecast. The agency lowered its 2025 Brent crude price forecast to $65.85 a barrel, from $67.87 a barrel. “The effect that new or additional tariffs will have on global economic activity and associated oil demand is still highly uncertain and could weigh heavily on oil prices going forward,” EIA said. It expects OPEC+ to keep production below the group’s current target path, forecasting supply to increase by about 200,000 barrels per day (bpd) this year to 42.9 million bpd, up from 42.8 million bpd in its prior forecast. EIA now expects U.S. oil output to set a smaller record this year at 13.42 million bpd, down from its prior forecast of 13.51 million bpd. Output next year will rise to 13.49 million bpd, EIA said, down from its prior forecast of 13.56 million bpd.
Chinese biofuel refiner Zhejiang Jiaao exports first SAF shipment... China’s Zhejiang Jiaao Enprotech said its east China-based subsidiary biofuel plant exported its first cargo of sustainable aviation fuel (SAF). The company did not disclose the 13,400 MT cargo’s destination, but multiple trade sources told Reuters it was bought by a Western trader and will be heading to Europe, possibly Spain.
Brazil gains zero-tariff quota for pork exports to South Korea... South Korea has approved a 10,000-MT duty-free quota for frozen pork imports from Brazil, eliminating the previous 25% tariff — except for pork belly cuts. The move is expected to significantly boost bilateral trade and expand Brazil’s presence in Asia’s protein market. Currently, only the Brazilian state of Santa Catarina is authorized to export pork to South Korea but there has been progress in improving animal health standards, particularly in Paraná and Rio Grande do Sul.
Cash cattle trade starts earlier than expected... Despite raising cash prices more than $13.00 the past three weeks and buying the largest total of cattle of the year last week, packers have remained active with cash bids. Initial cash trade got underway at steady/firmer prices in the Southern Plains on Tuesday, though many feedlots were holding out for even stronger prices.
Traders narrow futures’ premiums to cash hog index... Hog futures posted sharp losses on Tuesday despite continued strength in the cash hog index. The CME lean hog index is up another 27 cents to $90.13 as of May 5. As of Thursday’s close, the premium in May lean hog futures was trimmed to $1.42, while June hogs finished $7.445 above today’s index quote.
Overnight demand news... South Korea purchased 66,000 MT of corn that can be sourced from the U.S., South America or South Africa and tendered to buy up to 140,000 MT of corn from South America or South Africa. Algeria tendered to buy up to 240,000 MT of corn from Brazil or Argentina.
Today’s reports
- 9:30 a.m. Weekly Ethanol Production — EIA
- 10:00 a.m. Livestock and Meat International Trade Data — ERS
- 1:00 p.m. FOMC Meeting Concludes — FED
- 2:00 p.m. Broiler Hatchery — NASS